ORIENTAL INSURANCE CO. LTD. Vs. JITENDER AND ORS.

JUDGEMENT

(1.) Cm APPL.13045/2006 (delay)

(2.) The sole ground of challenge raised by the learned counsel for the Appellant is that during inquiry before the Claims Tribunal, the Appellant sufficiently established that the cheque in respect of premium for the policy issued to cover the risk in respect of vehicle no.HR-47G-0376 was dishonoured. The Insurance Company also duly intimated the insured about dishonour of the cheque. That having been done, the Insurance Company had no liability to pay the compensation. In any case, even if the Appellant was obliged to discharge third party liability, it ought to have been permitted to at least recover the amount of compensation paid from the insured.

(3.) The Claims Tribunal while relying on the judgments of the Supreme Court in National Insurance Company Limited v. Seema Malhotra & Ors., 2001 3 SCC 151 and Oriental Insurance Company Ltd. v. Inderjit Kaur & Ors., 1998 1 SCC 371, held that once the policy of insurance was issued only on receipt of a cheque towards premium in contravention of provision of Section 64-VB of the Insurance Act, the Insurance Company was obliged to indemnify third parties. The Claims Tribunal further relied on the judgment of Andhra Pradesh High Court in M. Nageswara Rao v. New India Assurance Company Limited & Ors., 2004 ACJ 1554 where it was held that where the cheque is dishonoured, the drawer has to be informed about the dishonour of the cheque and given an opportunity to make good the loss sustained by the drawee. Since the Insurance Company had failed to prove that any such notice was issued to the insured, the Insurance Company is not exempted from indemnifying the insured.